Brokers shrug off single-regulator issue: includes chart

“I have no interest; I don’t care what they do,” offers another Raymond James broker in Ontario. A Western broker with First Associates Investments Inc. says: “I don’t see the relevance of [a single regulator] at all.”

The indifference is echoed by some of their firms. “We really don’t have an opinion on the issue,” says Gary Reamey, head of Canadian operations for Edward Jones in Mississauga, Ont. He suggests that there isn’t much concern about it on the part of the reps at his firm, either.

Yet brokerage firms do claim to be
concerned about the impact of regulation.
“What we do want to make sure [of] is that whatever model there is out there treats individual investors fairly and is cost-effective,” Reamey says. “So whether that’s a single national securities regulator or a modified provincial regulator — whatever it is, as long as it treats the individual investor fairly and is cost-effective, that’s what is important.”

The federally appointed wise persons’ committee has said pretty clearly that the single-regulator model would be most cost-effective, and that the other benefits it would bring make it worth the work required to bring this model to life. However, the WPC also said the change would never happen without pressure from the industry. Yet many reps and firms plead indifference.

Noncommittal

Tom Monahan, head of Toronto-based CIBC Wood Gundy, says that the industry’s trade association, the Investment Dealers Association of Canada, speaks for his firm’s interest in the idea of a single regulator and adds that, so far, the IDA has maintained a noncommittal stance. The IDA has avoided supporting or opposing the idea — sticking to the line that substantive change is needed, that now would be a good time for it and laying out its criteria for change.

Monahan says CIBC Wood Gundy’s submission to the WPC favours a single regulator. Yet, he adds: “Our chief concern is that the regulatory environment is structured in a manner that meets the demands of our clients for integrity and openness in the investment process.”

With passionate platitudes such as that, it’s easy to see why the regulatory structure has been able to evolve into the convoluted creature that now oversees the markets. But could it be that the firms’ executives and industry lobbyists are not adequately reflecting the feelings of the reps? Reamey may believe the single-regulator issue isn’t very important to Edward Jones’ reps, but 22% of its advisors surveyed rate the issue a nine or 10 out of 10 in terms of industry importance.

In fact, throughout the survey, 85 brokers or 21% rated the single-regulator issue a nine or 10 out of 10 in terms of importance. This compares with just 36 who gave the issue a score of zero or one out of 10. While the average broker may not have much concern about the issue, many do realize its importance.

“[A single regulator is] very critical for Canada,” says a CIBC Wood Gundy broker from Ontario.

“We should have one,” agrees a Wellington West Capital Inc. broker from the East.
However, more than enthusiasm for the latest push to adopt a single regulator, brokers simply express their frustration with the prevailing system. A Canaccord Capital Corp. broker in Toronto calls the current system “Mickey Mouse,” complaining about the fees he pays in multiple provinces.

“Why are we 30 years behind the times?” asks a Raymond James broker from Saskatchewan.

That sense of the Canadian system’s obsolescence is no accident. Indeed, brokers who have been around longer are more likely to be the ones to say the single-regulator issue is very important.

Those who have no interest in the issue (rating it 0 or one) have been in the business for an average of slightly more than 10 years. Whereas those who call it critical (rating it nine or 10) tend to have more experience — an average of almost 13 years.